Rishi Sunak must be cursing the British weather. He got soaked to the skin when announcing the general election outside 10 Downing Street last month. Now it appears wet weather has brought a halt to the UK’s economic recovery.
Statisticians always caution against reading too much into a single month’s figures and on a quarterly basis things don’t look too bad for the prime minister. Indeed, the economy expanded by 0.7% in the three months to April, compared with 0.6% in the quarter ending in March.
But during an election campaign each piece of economic data takes on heightened importance and Labour was quick to exploit the fact that there was zero growth in April. Rachel Reeves, the shadow chancellor, said it exposed the damage caused by 14 years of “Conservative chaos”.
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In truth, it looks as if Reeves will inherit an economy in a slightly better state that she might have imagined a few months ago. The economy is out of recession and inflation is expected to be back to the government’s 2% target when the May figures are released next week.
What’s more, the economy would have grown in April had it not been for a 1.7% drop in construction output and a 2% fall in retail activity. Both declines were almost certainly weather-related.
That’s not to say the economy would have exactly been booming had April not been so cold and wet. Manufacturing output, which is not affected by the weather, fell by 1.7%.
Sunak really can’t catch a break. The latest growth figures are not strong enough for him to boast about on the campaign trail but not weak enough to persuade the Bank of England to cut interest rates next week.
Threadneedle Street is expecting growth in the second quarter to be just 0.2% but that looks overly pessimistic. It would only take monthly growth of 0.1% in both May and June for the economy to expand by 0.4% in the second quarter.
Unless something truly unexpected happens in the next three weeks, Reeves will be installed in the Treasury by the time borrowing costs start to come down.
